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Things to Consider for Setting up a Company (Part 2)

Sophie Mao LegalTips 2023-01-12


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4.     Office
Virtual offices are not allowed in China.  So the first thing you need to think about is: Do I have enough budget to rent an office?  Or is there any alternative?There are three options:1)     Rent an office in an office building, this is the most common way;2)     Rent a shared space in some office building. Usually you can register your company in the shared space.  However, if you want to use the company to apply for work permit for yourself or any one, you need to double check.3)     Rent a commercial apartment. There are two kinds of apartments, one is for living, another is for commercial purpose. The usage of a commercial apartment is more flexible, you can choose to live there (you can even cook there, as long as you don’t use open fire); you can use it as an office, or you can do both.5.     Business or industryA company can do many types of business, as long as it’s outside of the negative list or they get related permission.  However, it has to choose one industry as its main industry, and this will be mentioned in the company’s name. Other industries, will be covered in the “business scope” of the company.  According to related laws, permission from the competent authority is required for certain business, such as training, wine importing, and food production. The business license will be granted as per the shareholder’s application, but the company needs to meet certain requirements to get permission to do certain types of business.
6.     Budget and possible revenueAs we explained, there is no requirement or time frame for minimum registered capital contribution any more, you can start your business with limited funds. The threshold to start a company is pretty low now. However, it doesn’t mean there is no need to prepare funds to operate your business. You should calculate your budget carefully and prepare accordingly.  Of course, you will get some business after the company is set up, more or less.  But don’t count on any revenue which is not in your bank account yet.  Usually, I will tell my clients: suppose there is no revenue in one year, and prepare one year’s operation fund before you start your company, including but not limited to: rent, employee’s salary and social insurance.


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